The introduction of electronic trading mechanisms into exchanges for securities and derivatives has been an ongoing process. The desire for immediacy of order execution and dissemination of information is a predominant reason for the steady substitution to electronic mechanisms. As trading volume continues to grow, along with the accompanying need for an increasingly efficient trading environment, the move toward electronic trading mechanisms is favored.
Electronic exchanges, while efficient and nearly instantaneous, do not necessarily provide for the automated auction for internalization and complex orders as is done in traditional, open outcry trading environments. Presently, on some exchanges, such as the Chicago Board Options Exchange, complex orders and internalized orders are traded in open outcry. Other all-electronic exchanges have automated this functionality in efforts to attract order flow. It is desirable for an exchange utilizing an open outcry component to provide an auction mechanism for internalization and complex orders, including those with stock, as well as for simple orders.
Accordingly, there is a need for an exchange system and method that can address the drawbacks of both traditional open outcry exchanges and electronic exchanges as they pertain to the trading of simple orders, complex orders and internalized orders.